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Changes to Class 2 NI

There are changes occurring to the collection of Class 2 National Insurance Contributions- if you are affected you should have received a letter from HMRC.

There are changes occurring to the collection of Class 2 National Insurance Contributions- if you are affected you should have received a letter from HMRC.

These changes mean that you will get a break from paying the contributions for a while. If you are paying under a Direct Debit then the payment taken in July 2015 (in respect of the quarter that ended April 2015) will be the last until January 2017, when you will pay the Class 2 NIC along with your income tax and Class 4 contributions under self-assessment.

If you are paying by Standing Order you will need to stop the payments.

If you want to manage your cash flow by paying your tax and NIC as you go along you can set up a Budget Payment Plan, giving HMRC your money regularly in advance so you only have to pay any balance when your tax return has been completed. This can soften the impact of the tax bill due just after Christmas.

One down side to this long gap in contributions is that there will be a gap in your record for a while. Any benefits which are based on a longer history, such as state pension, should be relatively unaffected but other benefits- predominantly Maternity Allowance or ESA- look at the 15 months of contributions before your claim.

A 21 month period with no contributions would mean that entitlement to these benefits would be lost. To avoid this it is possible to pay the Class 2 contributions early. If you need to do so you should get in touch with your local JobCentre Plus, who will be able to assist.


Published: 09/09/2015

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